The ongoing competition between traditional banks and innovative Fintech firms might be coming to an end or is already over, according to Barclays, a British multinational investment bank and financial services company with over $1.2 trillion in assets.
A recent report from the London-headquartered investment bank claims that connectivity is now viewed as one of the most important considerations when evaluating a newly developed financial services platform and its supporting ecosystem. This is where the “banking-as-a-platform” model tends to dominate, Barclays’ report noted.
The corporate and personal banking service provider asked almost 2000 financial service industry participants (at the Money 20/20 events held in Asia, Europe, and the US) to comment on the present and future state of the rapidly evolving Fintech and digital banking industry.
Over 66% of survey respondents said that partnering and working cooperatively with Fintech firms for mutual benefit will most likely become a widely-adopted approach for traditional banking institutions in the foreseeable future.
According to Barclays’ report, Fintech companies will team up with traditional banks and promising startups in order to launch innovative products and services. Smaller companies will also work together to add their micro-specialisms to the services offered by larger financial service providers, the report predicts.
Phil Bowkley, global head of the financial institutions group at Barclays Corporate Banking, stated:
“As traditional banks look set to collaborate with fintechs for mutual benefit, and innovation continues to be driven from locations dispersed all over the world, what is clear is that in this fast moving environment successful business models will need to adapt rapidly and reflect regional sentiment and opportunities.”
The main driver for this cooperation is the changing demands and requirements from banking clients who are asking for seamless, personalized financial services.
A single organization (by itself), like a large bank or Fintech firm, might not be able to effectively and efficiently provide many of the financial services consumers want.
The report noted that China is on track to experience the largest increase in payment innovation in the coming years. Approximately 50% of Asian companies have ranked China as the main source of future innovation.
Meanwhile, 40% of European firms said the country would lead the way when it comes to adopting new payment platforms. US firms also ranked China among the top countries in terms of advancements in payment-related infrastructure development.
India has also been consistently ranked in the top three countries as a leading source of payment innovation in the future.